How can we have a service economy without good service?

For years now, the U.S. has slowly transitioned from a industrial economy to a service, or connection economy.  The idea being, that in the connection economy, service is our competitive advantage.  Unfortunately, companies speak about service from both sides of their mouth.  For instance, you may have heard your company CEO say that everything we do revolves around our customers, and then say we need to cut our workforce and do more with less, but I know you can do it because you care about our customers.  Maybe you heard your boss say that this client is our most important client and we need to do whatever it takes to keep them. You then report back what we need to do to keep said client and you are told we can't get approval for that as we can't spend any money.

Harold Meyerson wrote an opinion piece in the April 16th Washington Post titled Taking the "service" out of the service sector where he profiles companies such as JC Penney and Wal-Mart and how their "lean" approach to staffing has hurt their business.  Companies have to continue to work to make their service, or product more compelling if they want to stay competitive.  Expend the Emotional labor necessary to differentiate yourself from your competitors and be creative in the ways you look to grow your business, or make it more profitable. My experience is that when companies stand still, don't improve their product or service and just focus on cutting and slashing to the bottom line, neither short or long term business objectives get met. Unfortunately, these days, when a CEO talks to the rank and file about the future of the organization and spouts a dynamic phrase like business transformation to excite the team, it's really just code for we need to cut jobs.